The USD/CAD currency pair is coming under renewed selling pressure on Friday, cleaning up a good chunk of the moody resurgence delivered Thursday. This bearish development comes on the heels of several influences shaping the overall market sentiment towards the pair. Recent price action strongly suggests the continuation of a bearish consolidation phase. That’s after a significant retreat from a two-decade high that we hit in February.
New short-sellers flooded into the USD/CAD Friday trade. Their actions gave rise to a drop that was driven by technicals and fundamentals. The pair has been trading in a range-bound pattern over the last two weeks as the chart below shows. This indicates that speculators are getting more conservative with their positions.
Market watchers predict that if USD/CAD moves higher, it will be seen as a chance to sell. The pair’s price may meet resistance around the 200-day Simple Moving Average (SMA). Currently, that line in the sand is just shy of that magical level of 1.4000. This is an important level to watch for traders as it has proven to be a ceiling for price movements in the past.
After the first European session opened, USD/CAD spot prices had dropped down toward the 1.3800 level. This decline had them nearing the lowest levels they have seen since October 2024, which they established earlier this week. The loom tag rises further as the USD (US Dollar) backtracks slightly. This decrease follows the national average hitting a three-week high last Thursday.
The release of even more US jobs data, perhaps the most important yet, is just around the corner. Analysts are anticipating it to provide insight into the Federal Reserve’s policy direction, influencing the USD and USD/CAD pair heavily. Aside from sentiment, analysts are concerned that this data is bullish for bearish traders. These are strong signals that the likely trend for USD/CAD from here is down.
Should the bearish trend continue, USD/CAD may quickly fall in the direction of the 1.3740 intermediate support area. It may even go on to break below 1.3800 after that. The immediate obstacle for the pair lies at the overnight swing high, which printed near the 1.3860 area. Speculators are looking at the key 1.3900 level in the near-term.
After hitting historic lows, crude oil prices have actually gained ground lately, further lifting their commodity-linked home currency, the Canadian dollar also known as the Loonie. This increase is creating additional USD/CAD currency pair pressure. This dynamic is on stark display right now as market participants respond to a barrage of global economic data points.
Moreover, the minutes from the Bank of Canada’s (BoC) policy meeting held on April 16 revealed a divided Governing Council regarding interest rate decisions amid fluctuating US tariffs impacting USD/CAD. Uncertainty about US tariffs is keeping up the volatility in the forex markets. Forex markets have a laser focus on anything and everything that could change the trajectory of currency values.
Just last week, US President Donald Trump threatened to enact secondary sanctions against any country that buys Iranian oil. To complicate matters even further, this geopolitical tension has helped crude oil prices to rebound from a three-week low, which continues to affect USD/CAD dynamics.
Bearish traders are now looking ahead to the release of the US Non-Farm Payroll (NFP) report. They’re remaining on the defensive and holding off on making new predictions on USD/CAD until they observe clearer market signals. The next US jobs report will greatly influence the USD. Second, it will influence the overall market mood towards risk-assets and commodities.